Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 02-17-2012, 10:40 AM   #21
Recycles dryer sheets
Join Date: Nov 2006
Posts: 185
Originally Posted by Nords View Post
But what if you deferred your pension and started it in 2013? Then it'd be based on the 2013 pay table (max longevity at that rank). You'd get at least a 1.7% boost in your pension check for the rest of your life. You had to give up $1000 in Dec 2012 but now you're getting an extra $17/month. In five years you'd have made up the loss of the $1000.
I had not considered this since the payback period is based on the difference between the pay table raise and the annual COLA. If the retirement date is December they would get a COLA and reduce the $17/month difference and extend the break-even point. Am I off-base?

Tekward is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-17-2012, 03:04 PM   #22
Thinks s/he gets paid by the post
martyb's Avatar
Join Date: Nov 2006
Location: Bossier City
Posts: 2,182
Originally Posted by infoseeker View Post
martyb, thank you for that invaluable bit of information!

Once FEHB is suspended, sounds like the only way to switch back to FEHB is if other coverage (in our case TRICARE) is no longer available Suspension of FEHB Coverage to Use TRICARE, Medicare/Medicaid, or Certain State Sponsored Medical Assistance Plans TRICARE will always be available so how does that work?

Since my husband will switch to my insurance plan (until I turn 60 and we both pick up TRICARE) why not suspend FEHB immediately upon his retirement?

thanks again

You're welcome. I forgot to stress that it is imperative that you wait until AFTER you are actually enrolled in TriCare to suspend your FEHB. Best of luck to you. My understanding is that if you do the FEHB suspension for TriCare, and then later decide Tricare's just not working for you, you can switch back to FEHB at the next open season. However, if you involuntarily lose TriCare coverage for some reason, or, like Nords said, you find yourself in a situation where you can't use your TriCare because all the doctors in your area have stopped taking TriCare (only my speculation here), you can switch back to FEHB immediately, without having to wait for an open season. This is my interpretation of the OPM regs.

“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
-John F. Kennedy

“Hard work never killed anybody, but why take a chance?” - Edgar Bergen
martyb is offline   Reply With Quote
Old 02-17-2012, 10:41 PM   #23
Moderator Emeritus
Nords's Avatar
Join Date: Dec 2002
Location: Oahu
Posts: 26,564
Originally Posted by Nords View Post
The last number I saw for a 2013 pay raise was 1.7%. Waiting a month to use the 2013 pay tables would cost you a month of retired pay (let's call it $1000) but would boost your pension by 1.7%. (This is only an effect on us Final Pay pensioners.) So you'd earn an extra $17/month for the rest of your life, and the payback on the foregone $1000 would be just under five years.
OK, lets assume I want to start retiree pay in Dec and according to the 2012 pay table its $1000/month. Lets also assume the pay raise of 1.7% goes into effect for 2013. I collect $1000 in Dec and $1017 starting the next month, Jan 2013. Now, lets say I decide to delay pay to start Jan 2013. Since pay raise has gone into effect, my Jan paycheck will still be $1017. So, I'm does delaying start month from Dec to Jan benefit me?
Originally Posted by Tekward View Post
I had not considered this since the payback period is based on the difference between the pay table raise and the annual COLA. If the retirement date is December they would get a COLA and reduce the $17/month difference and extend the break-even point. Am I off-base?
Nope. This is a one-time opportunity to game the active-duty pay raise.

You'd collect $1000 in Dec but you wouldn't get the 2013 COLA since you hadn't been retired long enough, so you'd receive $1000 for each of the next 12 months. Then at the end of 2013 you'd get a retiree COLA for 2014. And every year after that you'd get a retiree COLA, but you'd never see an active-duty pay raise.

If you waited until Jan then you'd get $1017, and at the end of that 2013 you'd get the same retiree COLA applied to the extra $17 as well as the $1000. So it's actually a bit of a compounding effect.

But you'd never again be able to exploit an active-duty pay raise.

The amount of the pension and the amount of the pay raise affect your payback period, so it might not be worth waiting a month if the payback is 10+ years.

This is just a niche for Final Pay retirees, not for High Three, because High Three averages their final 36 months of pay and one month isn't a significant difference. And it really only makes a difference if you're born in Nov/Dec. My spouse is a Nov birthday so I remembered the gimmick.

I read about this deferral option just once in the AUSN magazine, so it was published somewhere between 2001 and 2008. But I can't find it.

By the way, one of you sent me a PM about calculating a High Three Reserve retirement, so here's how it works.

Here's what the Association of the U.S. Navy website says about High Three Reserve retirement in one of their articles:
This system applies to anyone with a DIEMS of 8 September 1980 to present. Retired pay is calculated based on a figure derived from the average of the last 36 months of basic pay for the approved retired grade (highest grade satisfactorily held), and from the length of service (longevity) prior to reaching age 60. In other words, it is the basic pay in effect when you were ages 58, 59, and 60. The percentage of that figure (36-month average) you will receive is calculated by dividing your total points by 360 and multiplying that figure (equal to years and months) by 2.5 percent.
So you still start with your total points, divided by 360, multiplied by 2.5% to get the service multiple.

But then the pay calculation is painful. You have to have 36 months of pay charts (the years you turn ages 60, age 59, age 58, and age 57). For each one you'll take the max pay at that rank (max longevity) and the number of months of that year. Then you'll add them all together and divide by 36.

Let's say you turn age 60 in June 2012. You'd use six months (Jan-June) of pay for that rank at the max longevity in the 2012 pay table.

Then you'd use 12 months of max pay for that rank in the 2011 pay table.

You'd add another 12 months of max pay for that rank in the 2010 pay table.

Finally you'd add another six months of max pay for that rank in the 2009 pay table.

Now that you have the final 36 months of pay, you add all those numbers up and divide by 36 to get the final average monthly high-three pay.

That base pay number is multiplied by the service multiple to get the monthly pension amount.

AUSN's website doesn't even have a calculator for this. They have a "Contact us" form that you fill out with the pertinent birthday & points data, and then someone at AUSN calculates the pension amount by hand.

This might not make for a very exciting blog post, but it'll be a challenge to write!


The book written on, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Want to buy a ladder - questions Texas Proud Other topics 96 04-15-2012 10:34 AM
TRICARE Changes FY 2013 mickeyd Health and Early Retirement 10 02-03-2012 12:08 PM
TRICARE Offers Free Vaccines (Including Shingles) mickeyd Health and Early Retirement 2 09-02-2011 10:37 PM
Terro Ant Trap Questions kaneohe Other topics 24 08-12-2011 06:20 PM
Questions on relocating to SE Asia Ozziedreamer Life after FIRE 29 07-27-2011 05:32 AM


All times are GMT -6. The time now is 01:09 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.